December was the worst performing market since the Depression and not surprisingly January is shaping up to be one of the best. Even with today’s slight pullback, the S&P 500 is up 10% from the Christmas Eve low.
The move back to risk isn’t unanticipated, given December’s extreme (and I believe unwarranted) selloff. What I do find fascinating is how well the market is holding up, given the prolonged government shutdown and headline corporate profit misses.
Will the market optimism last? After such a volatile season, history suggests that a short term pullback to test the December low is very likely. If that happens, I’d view it as a buying opportunity.
What I find most encouraging is not that the S&P 500 is up so much, but rather that Emerging Markets have been outperforming for the past three months. (see chart)
PS- I’ve been negligent about releasing a new podcast episode…forgive me, one’s on the way. On the bright side, I have been adding to the video content at YouTube…the latest video illustrates S&P 500 fair value and how that might impact 2019 performance: https://youtu.be/36-148xJNBM
The Robots are Coming: A Human’s Survival Guide to Profiting in the Age of Automation available at AMAZON and all fine bookstores.
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